12. Stockholders’ Equity

Common Stock

At the Company’s 2022 Annual Meeting of Stockholders held on June 21, 2022, its stockholders approved an amendment to its certificate of incorporation to increase the number of authorized shares of Common Stock available to issue by 30 million to 200 million. The amendment was filed with the Secretary of State of the State of Delaware on July 11, 2022.

Equity Incentive Plan

The Company has in effect the 2013 Stock Incentive Plan, as amended (the “Incentive Plan”). The Incentive Plan was adopted in 2013 by our stockholders and the compensation committee of the Company’s board of directors; eligible awardees of stock-based awards under the Incentive Plan include directors, officers, employees and consultants. In June 2022, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 3.0 million shares, for a total of 16.0 million shares.

As of September 30, 2022, 4,510,462 shares are available for issuance under the Incentive Plan.

Stock-based Compensation

The following table summarizes the stock-based compensation expense from stock option, employee stock purchase programs and restricted Common Stock awards and warrants for the three and nine months ended September 30, 2022 and 2021:

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For the three months ended September 30, 2022 and 2021, approximately $1.0 million and $1.1 million, respectively, of stock-based compensation expense was included in research and development expenses in connection with equity grants made to employees and consultants and approximately $5.8 million and $3.2 million, respectively, was included in general and administrative expenses in connection with grants made to employees, members of the board of directors and consultants.

For the nine months ended September 30, 2022 and 2021, approximately $3.6 million and $3.1 million, respectively, of stock-based compensation expense was included in research and development expenses in connection with equity grants made to employees and consultants and approximately $13.9 million and $9.4 million, respectively, was included in general and administrative expenses in connection with grants made to employees, members of the board of directors and consultants.

Stock Options

The following table summarizes Fortress stock option activities excluding activity related to Fortress partner companies:

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As of September 30, 2022, Fortress had no unrecognized stock-based compensation expense related to options.

Restricted Stock and Restricted Stock Units

The following table summarizes Fortress restricted stock awards and restricted stock units activities, excluding activities related to Fortress Companies:

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As of September 30, 2022 and 2021, the Company had unrecognized stock-based compensation expense related to restricted stock and restricted stock unit awards of approximately $22.9 million and $21.1 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of 2.0 years and 3.1 years, respectively.

Warrants

The following table summarizes Fortress warrant activities, excluding activities related to Fortress Companies:

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In connection with the Oaktree Note (see Note 8), the Company issued warrants to Oaktree and certain of its affiliates to purchase up to 1,749,450 shares of Common Stock at a purchase price of $3.20 per share (the “Oaktree Warrants”). Oaktree is entitled to additional warrants if at any time prior to the expiration of the Oaktree Warrants the Company issues equity, warrants or convertible notes (collectively known as “Security Instruments”) at a price that is less than 95% of the market price of the Company’s Common Stock on the trading day prior to the issuance of the Security Instruments. The Oaktree Warrants expire on August 27, 2030 and may be net exercised at the holder’s election. The Company filed a registration statement on Form S-3 to register the resale of the shares of Common Stock issuable upon exercise of the Oaktree Warrants that was declared effective by the SEC on November 20, 2020.

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Long-Term Incentive Program (“LTIP”)

On July 15, 2015, the Company’s stockholders approved the LTIP for the Company’s Chairman, President and Chief Executive Officer, Dr. Rosenwald, and Executive Vice Chairman, Strategic Development, Mr. Weiss (amended and restated with stockholder approval on June 7, 2017). The LTIP consists of a program to grant equity interests in the Company and in the Company’s subsidiaries, and a performance-based bonus program that is designed to result in performance-based compensation that is deductible without limit under Section 162(m) of the Internal Revenue Code of 1986, as amended.

On January 1, 2022 and 2021, the Compensation Committee granted 1,102,986 and 1,030,339 shares each to Dr. Rosenwald and Mr. Weiss, respectively. These equity grants were made in accordance with the LTIP, and represent 1% of total outstanding shares of the Company as of the dates of such grants. The shares will vest in full if the employee is either in the service of the Company as an employee, Board member or consultant (or any combination of the foregoing) on the tenth anniversary of the LTIP, or the eligible employee has had an involuntary Separation from Service (as defined in the LTIP).  The only other vesting condition – one based on achievement of an increase in the Company’s market capitalization – has already been achieved, with respect to each annual award under the LTIP. The shares awarded under the LTIP will also vest in full (and the Company’s repurchase option on each tranche of shares granted thereunder will accordingly lapse) upon the occurrence of a Corporate Transaction (as defined in the LTIP), if the eligible employee is in service to the Company on the date of such Corporate Transaction. The fair value of each grant on the grant date was approximately $2.8 million for the 2022 grant and $3.3 million for the 2021 grant. For the three months ended September 30, 2022 and 2021, the Company recorded stock compensation expense related to LTIP grants of approximately $1.3 million and $1.0 million, respectively, and for the nine months ended September 30, 2022 and 2021, recorded expense of approximately $4.0 million and $2.9 million, respectively, on the condensed consolidated statement of operations.

Capital Raises

2021 Shelf

On July 23, 2021, the Company filed a shelf registration statement 333-255185 on Form S-3, which was declared effective on July 30, 2021 (the "2021 Shelf"). No securities have been taken down under the 2021 Shelf as of September 30, 2022.

Common Stock At-the-Market Offering and 2020 Shelf

On May 18, 2020, the Company filed a shelf registration statement on Form S-3, which was declared effective on May 26, 2020 (the "2020 Shelf"). In connection with the 2020 Shelf, the Company entered into an At Market Issuance Sales Agreement ("2020 Common ATM"), governing potential sales of the Company's Common Stock.

For the nine-month period ended September 30, 2022, the Company issued approximately 3.7 million shares of Common Stock at an average price of $1.59 per share for gross proceeds of $5.9 million. For the nine-month period ended September 30, 2021, the Company issued approximately 0.8 million shares at an average price of $3.60 for gross proceeds of $2.8 million pursuant to the 2020 Common ATM. Approximately $11.5 million of securities remain available for sale under the 2020 Shelf at September 30, 2022.  

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Mustang At-the-Market Offering (the “Mustang ATM”)

During the nine months ended September 30, 2022, Mustang issued approximately 7.9 million shares of common stock at an average price of $0.84 per share for gross proceeds of $6.6 million through the Mustang ATM. In connection with these sales, Mustang paid aggregate fees of approximately $0.1 million. During the nine months ended September 30, 2021, Mustang issued approximately 17.3 million shares of common stock at an average price of $3.87 per share for gross proceeds of $66.9 million through the Mustang ATM. In connection with these sales, Mustang paid aggregate fees of approximately $1.3 million.

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Pursuant to the terms of the Founder’s Agreement between the Company and Mustang (see Note 14), Mustang issued to Fortress 2.5% of the aggregate number of shares of Mustang common stock issued in connection with the shares issued through the Mustang ATM.    Accordingly, Mustang issued 241,260 shares of common stock to Fortress at a weighted average price of $1.16 per share for the nine months ended September 30, 2022 and recorded 6,987 shares issuable to Fortress in connection with the shares issued through the Mustang ATM.  Mustang issued 517,304 shares of common stock at a weighted average price of $3.84 per share to Fortress for the nine months ended September 30, 2021 in connection with the shares issued through the Mustang ATM.

On October 23, 2020, Mustang filed a shelf registration statement No. 333-249657 on Form S-3 (the “Mustang 2020 S-3”), which was declared effective on December 4, 2020. Through the Mustang 2020 S-3, Mustang may sell up to a total of $100.0 million of its securities. As of September 30, 2022, approximately $8.0 million of the Mustang 2020 S-3 remains available for sales of securities.

On April 23, 2021, Mustang filed a shelf registration statement No. 333-255476 on Form S-3 (the “Mustang 2021 S-3”), which was declared effective on May 24, 2021. Through the Mustang 2021 S-3, Mustang may sell up to a total of $200 million of its securities. As of September 30, 2022, $200 million of the Mustang 2021 S-3 remains available for sales of securities.

Checkpoint At-the-Market Offering (the “Checkpoint ATM”)

During the nine months ended September 30, 2022, Checkpoint issued 5,157,914 shares of common stock through the Checkpoint ATM for aggregate total gross proceeds of approximately $9.9 million at an average selling price of $1.93 per share. During the nine months ended September 30, 2021, Checkpoint issued approximately 10.9 million shares of common stock through the Checkpoint ATM for aggregate total gross proceeds of approximately $37.2 million at an average selling price of $3.42 per share.

Pursuant to the Founders Agreement between the Company and Checkpoint (see Note 14), Checkpoint issued to Fortress 2.5% of the aggregate number of shares of Checkpoint common stock issued through the Checkpoint ATM. Accordingly, Checkpoint issued 128,931 shares of common stock to Fortress for the nine months ended September 30, 2022 at a weighted average price of $1.85 per share and issued 271,515 shares of common stock at a weighted average price of $3.41 for the nine months ended September 30, 2021.

The Checkpoint S-3 is a shelf registration statement filed by Checkpoint in November 2020 that was declared effective in December 2020, through which Checkpoint may sell up to $100 million of its securities. At September 30, 2022, approximately $44.7 million of the Checkpoint shelf remains available for sale through the Checkpoint S-3.

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Journey Convertible Preferred Shares

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In March 2021, Journey commenced an offering of 8% Cumulative Convertible Class A Preferred Stock (“Journey Preferred Offering”) in an aggregate minimum amount of $12.5 million and an aggregate maximum amount of $30.0 million. The Journey Preferred Offering terminated on July 18, 2021. As of September 30, 2021, Journey completed five closings and issued an aggregate of 758,680 Journey Preferred shares at a price of $25.00 per share, for gross proceeds of $19.0 million. Following the payment of placement agent fees of $1.9 million, and other expenses of $0.1 million, Journey received $17.0 million of net proceeds.